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Regulation (EU) 2016/1011 of the European Parliament and of the CouncilShow full title

Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (Text with EEA relevance)

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TITLE VU.K.USE OF BENCHMARKS IN THE [F1UNITED KINGDOM]

Article 29U.K.Use of a benchmark

1.A supervised entity may use a benchmark or a combination of benchmarks in the [F2United Kingdom] if the [F3benchmark:

(a)is on the FCA register; or

(b)is provided by an administrator who is on the FCA register and located in the United Kingdom.]

[F41A.Paragraph 1 does not enable a supervised entity to use a benchmark in the United Kingdom in breach of a prohibition under Article 21A or 23B.

1B.The use of a benchmark by a supervised entity for a financial contract, financial instrument or investment fund in breach of a prohibition under Article 21A or 23B does not affect the validity or enforceability of a contract or other arrangement.]

2.Where the object of a prospectus to be published [F5in accordance with rules made by the FCA under section 84 or 248 of FSMA, as those rules have effect on IP completion day] is transferable securities or other investment products that reference a benchmark, the issuer, offeror, or person asking for admission to trade on a regulated market shall ensure that the prospectus also includes clear and prominent information stating whether the benchmark is provided by an administrator included in the [F6FCA register].

Textual Amendments

Article 30U.K.Equivalence

1.In order for a benchmark or a combination of benchmarks provided by an administrator located in a third country to be used in the [F7United Kingdom] in accordance with Article 29(1), the benchmark and the administrator shall be included in the [F8FCA register]. The following conditions shall be complied with in order to be included in the register:

[F9(a)either:

(i)the Treasury have made regulations in accordance with paragraph 2 or 3 of this Article; or

(ii)the European Commission has adopted a decision before IP completion day in accordance with paragraph 2 or 3 of Article 30 of the EU Benchmarks Regulation;]

(b)the administrator is authorised or registered, and is subject to supervision, in the third country in question;

(c)[F10the FCA] is notified by the administrator of its consent that its actual or prospective benchmarks may be used by supervised entities in the [F11United Kingdom], of the list of the benchmarks for which they have given consent to be used in the [F11United Kingdom] and of the competent authority responsible for its supervision in the third country; and

(d)the cooperation arrangements referred to in paragraph 4 of this Article are operational.

2.The [F12Treasury may by regulations specify] that the legal framework and supervisory practice of a third country ensures that:

(a)administrators authorised or registered in that third country comply with binding requirements which are equivalent to the requirements under this Regulation, in particular taking account of whether the legal framework and supervisory practice of a third country ensures compliance with the IOSCO principles for financial benchmarks or, where applicable, with the IOSCO principles for PRAs; and

(b)the binding requirements are subject to effective supervision and enforcement on an on-going basis in that third country.

F13...

3.Alternatively, the [F14Treasury may by regulations specify] that:

(a)binding requirements in a third country with respect to specific administrators or specific benchmarks or families of benchmarks are equivalent to the requirements under this Regulation, in particular taking account of whether the legal framework and supervisory practice of a third country ensures compliance with the IOSCO principles for financial benchmarks or, where applicable, with the IOSCO principles for PRAs; and

(b)such specific administrators or specific benchmarks or families of benchmarks are subject to effective supervision and enforcement on an on-going basis in that third country.

F15...

4.[F16The FCA] shall establish cooperation arrangements with the competent authorities of third countries whose legal framework and supervisory practices have been recognised as equivalent in accordance with paragraph 2 or 3 [F17of this Article (on or after IP completion day) or paragraph 2 or 3 of Article 30 of the EU Benchmarks Regulation (before IP completion day)]. Such arrangements shall specify at least:

(a)the mechanism for the exchange of information between [F18the FCA] and the competent authorities of third countries concerned, including access to all relevant information regarding the administrator authorised in that third country that is requested by [F18the FCA];

(b)the mechanism for prompt notification to [F19the FCA] where a third country competent authority deems that the administrator authorised in that third country that it is supervising is in breach of the conditions of its authorisation or other national legislation in the third country;

(c)the procedures concerning the coordination of supervisory activities, including on-site inspections.

[F205.The FCA may make technical standards to determine the minimum content of the cooperation arrangements referred to in paragraph 4 so as to ensure that the FCA is able to exercise all its supervisory powers under this Regulation.]

Textual Amendments

Article 31U.K.Withdrawal of registration of an administrator located in a third country

1.[F21The FCA] shall withdraw the registration of an administrator located in a third country by removing that administrator from the [F22FCA register] where it has well-founded reasons, based on documented evidence, that the administrator:

(a)is acting in a manner which is clearly prejudicial to the interests of the users of its benchmarks or the orderly functioning of markets; or

(b)has seriously infringed the national legislation in the third country or other provisions applicable to it in the third country and on the basis of which the [F23Treasury have made regulations in accordance with Article 30(2) or (3) (on or after IP completion day) or the European Commission adopted an implementing decision in accordance with Article 30(2) or (3) of the EU Benchmarks Regulation (before IP completion day)].

2.[F24The FCA] shall take a decision under paragraph 1 only if the following conditions are fulfilled:

(a)[F25the FCA] has referred the matter to the competent authority of the third country and that competent authority has not taken the appropriate measures needed to protect investors and the orderly functioning of the markets in the [F26United Kingdom], or has failed to demonstrate that the administrator concerned complies with the requirements applicable to it in the third country;

(b)[F27the FCA] has informed the competent authority of the third country of its intention to withdraw the registration of the administrator, at least 30 days before the withdrawal.

3.[F28The FCA] shall publish its decision on its website.

Textual Amendments

Article 32U.K.Recognition of an administrator located in a third country

1.Until such time as [F29regulations are made in accordance with Article 30(2) or (3)], a benchmark provided by an administrator located in a third country may be used by supervised entities in the [F30United Kingdom] provided that the administrator acquires prior recognition by the [F31FCA] in accordance with this Article.

2.An administrator located in a third country intending to obtain prior recognition as referred to in paragraph 1 of this Article shall comply with the requirements established in this Regulation, excluding Article 11(4) and Articles 16, 20, 21 and 23. The administrator may fulfil that condition by applying the IOSCO principles for financial benchmarks or the IOSCO principles for PRAs, as applicable, provided that such application is equivalent to compliance with the requirements established in this Regulation, excluding Article 11(4), and Articles 16, 20, 21 and 23.

For the purposes of determining whether the condition referred to in the first subparagraph is fulfilled, and in order to assess compliance with the IOSCO principles for financial benchmarks or the IOSCO principles for PRAs, as applicable, the [F32FCA] may rely on an assessment by an independent external auditor or, where the administrator located in a third country is subject to supervision, on the certification provided by the competent authority of the third country where the administrator is located.

If, and to the extent that, an administrator is able to demonstrate that a benchmark it provides is a regulated-data benchmark or a commodity benchmark that is not based on submissions by contributors the majority of which are supervised entities, there shall be no obligation on the administrator to comply with requirements not applicable to the provision of regulated-data benchmarks and of commodity benchmarks as provided for in Article 17 and Article 19(1) respectively.

3.An administrator located in a third country intending to obtain prior recognition as referred to in paragraph 1 shall have a legal representative established in [F33the United Kingdom]. The legal representative shall be a natural or legal person located in the [F34United Kingdom], and which, expressly appointed by the administrator located in a third country, acts on behalf of such administrator vis-à-vis the authorities and any other person in the [F34United Kingdom] with regard to the administrator's obligations under this Regulation. The legal representative shall perform the oversight function relating to the provision of benchmarks performed by the administrator under this Regulation together with the administrator and, in that respect, shall be accountable to the [F35FCA].

F364.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.An administrator located in a third country intending to obtain prior recognition as referred to in paragraph 1 shall apply for recognition with the [F37FCA]. The applicant administrator shall provide all information necessary to [F38satisfy the FCA] that it has established, at the time of recognition, all the necessary arrangements to meet the requirements referred to in paragraph 2 and shall provide the list of its actual or prospective benchmarks which may be used in the [F39United Kingdom] and shall, where applicable, indicate the competent authority responsible for its supervision in the third country.

Within 90 working days of receipt of the application referred to in the first subparagraph of this paragraph, the [F40FCA] shall verify that the conditions laid down in paragraphs [F412 and 3] are fulfilled.

If the [F42FCA] considers that the conditions laid down in paragraphs [F432 and 3] are not fulfilled, it shall refuse the recognition request and set out the reasons for that refusal. In addition, no recognition shall be granted unless the following additional conditions are fulfilled:

(a)where an administrator located in a third country is subject to supervision, an appropriate cooperation arrangement is in place between the [F44FCA] and the competent authority of the third country where the administrator is located, in compliance with the [F45technical standards made] pursuant to Article 30(5), in order to ensure an efficient exchange of information that [F46allows the FCA] to carry out its duties in accordance with this Regulation;

(b)the effective exercise by the [F47FCA] of its supervisory functions under this Regulation is neither prevented by the laws, regulations or administrative provisions of the third country where the administrator is located, nor, where applicable, by limitations in the supervisory and investigatory powers of that third country's supervisory authority.

F486.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F487.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.The [F49FCA] shall suspend or, where appropriate, withdraw the recognition granted in accordance with paragraph 5 if it has well-founded reasons, based on documented evidence, to consider that the administrator is acting in a manner which is clearly prejudicial to the interests of users of its benchmarks or the orderly functioning of markets or the administrator has seriously infringed the relevant requirements set out in this Regulation, or that the administrator made false statements or used any other irregular means to obtain the recognition.

9.[F50The FCA may make] technical standards to determine the form and content of the application referred to in paragraph 5 F51...

F52...

F52...

Textual Amendments

Article 33U.K.Endorsement of benchmarks provided in a third country

1.An administrator located in the [F53United Kingdom] and authorised or registered in accordance with Article 34, or any other supervised entity located in the [F53United Kingdom] with a clear and well-defined role within the control or accountability framework of a third country administrator, which is able to monitor effectively the provision of a benchmark, may apply to the [F54FCA] to endorse a benchmark or a family of benchmarks provided in a third country for their use in the [F53United Kingdom], provided that all of the following conditions are fulfilled:

(a)the endorsing administrator or other supervised entity has verified and is able to demonstrate on an on-going basis to [F55the FCA] that the provision of the benchmark or family of benchmarks to be endorsed fulfils, on a mandatory or on a voluntary basis, requirements which are at least as stringent as the requirements of this Regulation;

(b)the endorsing administrator or other supervised entity has the necessary expertise to monitor effectively the activity of the provision of a benchmark in a third country and to manage the associated risks;

(c)there is an objective reason to provide the benchmark or family of benchmarks in a third country and for said benchmark or family of benchmarks to be endorsed for their use in the [F56United Kingdom].

For the purpose of point (a), when assessing whether the provision of the benchmark or family of benchmarks to be endorsed fulfils requirements which are at least as stringent as the requirements of this Regulation, the [F57FCA] may take into account whether the compliance of the provision of the benchmark or family of benchmarks with the IOSCO principles for financial benchmarks or the IOSCO principles for PRAs, as applicable, would be equivalent to compliance with the requirements of this Regulation.

2.An administrator or other supervised entity that makes an application for endorsement as referred to in paragraph 1 shall provide all information necessary to satisfy the [F58FCA] that, at the time of application, all the conditions referred to in that paragraph are fulfilled.

3.Within 90 working days of receipt of the application for endorsement referred to in paragraph 1, the [F59FCA] shall examine the application and adopt a decision either to authorise the endorsement or to refuse it. F60...

4.An endorsed benchmark or an endorsed family of benchmarks shall be considered to be a benchmark or family of benchmarks provided by the endorsing administrator or other supervised entity. The endorsing administrator or other supervised entity shall not use the endorsement with the intention of avoiding the requirements of this Regulation.

5.An administrator or other supervised entity that has endorsed a benchmark or a family of benchmarks provided in a third country shall remain fully responsible for such a benchmark or family of benchmarks and for compliance with the obligations under this Regulation.

6.Where the [F61FCA] has well-founded reasons to consider that the conditions laid down under paragraph 1 of this Article are no longer fulfilled, it shall have the power to require the endorsing administrator or other supervised entity to cease the endorsement F62.... Article 28 shall apply in case of cessation of the endorsement.

7.The [F63Treasury may make regulations] to determine the conditions under which the [F64FCA] may assess whether there is an objective reason for the provision of a benchmark or family of benchmarks in a third country and their endorsement for their use in the [F65United Kingdom]. [F66When determining the conditions, the Treasury] shall take into account elements such as the specificities of the underlying market or economic reality the benchmark intends to measure, the need for proximity of the provision of the benchmark to such market or economic reality, the need for proximity of the provision of the benchmark to contributors, the material availability of input data due to different time zones, and specific skills required in the provision of the benchmark.

Textual Amendments

Textual Amendments

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